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General Motors’ demand that Subaru build a lightly face-lifted version of the Impreza for Saab to sell as a 9-2 in the United States is meeting strong opposition inside Subaru.

The plan, hatched by General Motors under the guidance of ‘product supremo’ Bob Lutz, has been labelled “an act of desperation” by GM insiders as the world’s biggest car maker struggles to pull the Swedish subsidiary out of financial difficulties.

Industry watchers believe General Motors resisted taking charge sooner, instead giving Saab the opportunity to turn its fortunes around. A $US500 million loss in 2002 was the last straw, prompting GM to send in the cost cutting troops. For Saab to achieve financial stability – and profitability – GM believes Saab must extend its line-up.

GM’s plans for Saab start with the Impreza-based 9-2 and extend to a mid-sized SUV based on the Chevrolet Trailblazer. Both vehicles are, at this stage, planned for the US market only – the world’s largest car market, with roughly 16 million new vehicles sold every year.

Subaru’s general manager of total vehicle performance,Takeshi Tachimori, revealed that Subaru and its dealers in the United States are unhappy with the plan. “The dealers think our unique and individual character — our symmetrical all-wheel-drive (AWD) drivetrain — is important for selling Subaru,” he said. “They don’t want to see the same horizontally opposed, AWD vehicle next door with a different badge.”

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By GlobalData

Tachimori, like many others in the industry, is sceptical about the success of badge engineering. “We are working with the Saab people, we are trying to understand why they say they can sell the Saab more expensive than the Subaru.”

“We ask them, and they say it is because Saab is a premium brand in the US.”

So why get involved? Why relinquish the company’s biggest selling proposition, its unique, symmetrical all-wheel drivetrain? Is this a case of Subaru doing what GM — which owns 20% of Subaru — tells it to do? “Aah, yes,” Tachimori agreed. “We do it because Bob Lutz tells us to do it.”

Publicly, Subaru is upbeat about the project. “We are very proud of our technology and it is a good opportunity to spread our technology through the GM group,” said Subaru corporate vice president Hiroshi Suzuki.

Suzuki believes the relationship is only good: “It doesn’t harm us, it brings benefit to us.” He does admit, however, that Subaru played hard at the bargaining table.

“We give them our AWD technology and [in exchange] we learn a lot from their emission technology and hybrid know-how.”

Suzuki believes the 9-2 is only the start. “We are going to expand our collaboration in the future,” though he won’t be drawn further, saying it is too early to tell. “We watch this one first, then we see in three or four years.”

The Saab 9-2 version of the Subaru Impreza is set for sale in North America in 2004 and will be sold in hatchback form only, with 2.5-litre normally-aspirated and turbocharged two-litre engines. It will have Saab design themes around the headlights, taillights and bumpers — limited time prevents any alterations to the roof line and doors.

According to Tachimori, the 9-2 will have a unique Saab character. “We want to differentiate the taste of the vehicle. This we do through suspension, steering and throttle [response and feel].”

Inside, the dash and centre console will change, as will seat fabrics. “Saab is also asking for curtain airbags,” revealed Tachimori. Saab also asked Subaru to relocate the ignition key to the centre console beside the handbrake, a long-standing tradition in the Swedish company’s cars. “Yes, they did ask for that,” he said. “We said ‘no’.”

At this stage there are no plans to build the 9-2 in right hand drive, but this wouldn’t be hard to do with the Impreza-based vehicle. If the new car is successful in the lucrative US market, Saab and Subaru may look for opportunities elsewhere around the globe.